Telecom baron, Sunil Bharti Mittal has spoken about his take on organised retail, including his reasons for why he choose Wal-Mart over Tesco as his retailing partner, in an interview in the Business Standard (5th January, 2007). We reproduce below relevant excerpts from the interview:
On Tesco tie up not coming through:
We were a partner of choice for many retailers worldwide and it is true that we were in discussions with Tesco for a long period. But we needed a partner with similar ambitions in India as far as speed, scale and size of operations are concerned, and Wal-Mart scored fairly high on these parameters.
On fears of small kirana stores being wiped out by big MNC retailers:
Whether Wal-Mart comes or not, those who are inefficient would go away. Our research shows that the younger generation in families that own small shops are less inclined to run them – they are more educated.
So a large number of such shops will close down. Also, rentals are rising sharply, so renting the shop out would be more profitable than running it. Surely, there will be those who would face the impact of organised retail, whether Indian or foreign.
My estimate is that if in the next 10 years, India reaches a retail trade level of $500 billion, not more than $50-75 billion would come to the organised sector. So all such fears are baseless. In fact, organised retail will generate a large number of jobs, some of which would go to the children of such shopkeepers.
On quality commercial space having been already acquired by existing players:
If you look at the Rahejas, Pantaloon or RPG, how much space have they acquired? Nobody has even scratched the surface. Sure, the prices are high, and they have to be closely watched, but there is no dearth of availability.
On Hypermarket format not being succesful outside big cities in India:
Wal-Mart does small formats in Japan and Mexico. In the US, it has only large formats. We are clear that we will do multi-formats, but big-box strategy will be a thrust area.
— Business Standard (Issues and Insights: Q & A) January 5, 2007.